Netease broadens internal probe

Company's CEO, COO tender resignations

BEIJING (CBS.MW) - Shares of Netease.com tumbled Monday after the China-based provider of Internet technology said it had expanded the scope of its internal investigation and announced the resignation of two senior executives.

The company said the internal probe would now cover the possible "incorrect reporting" of its 2000 financial statements. The investigation is focused on approximately $3 million in contracts, which may have been attributed incorrectly.

The company had previously announced an internal investigation on May 8, at which time the misreporting was thought to only affect first-quarter 2001 results.

"We are, of course, disappointed by these most recent findings," said William Ding, NetEase's founder and chairman. "We believe that our thoroughness will benefit our shareholders and help restore confidence in our prospects and financial results."

Separately, Netease announced King Lai resigned as the company's chief executive officer and Susan Chen resigned as chief operating officer "to pursue other interests." The company said it has not decided on who will fill those positions on a permanent basis; Ding will assume the roles temporarily.

"I am confident that these changes will have a minimal impact on NetEase.com's business continuity and will endeavor to make the transition as seamless as possible for our employees, shareholders, Web site users and strategic partners," Ding commented.

Netease's stock had garnered investor interest following press reports that its founder had agreed to sell the company to Hong Kong's I-Cable Communications
ICAB
A spokesman for NetEase said that the company wouldn't comment on speculation.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.